STOCKHOLM (AP) — Scrambling for a quick fix for its cash-strapped unit Saab, Spyker Cars NV on Monday signed a distribution deal with the Chinese company Pang Da, but postponed plans to start production in China to avoid regulatory issues.
The Netherlands-based Spyker Cars said Pang Da will inject euro65 million ($92 million) for a 24 percent stake in Spyker, and the two will form a 50/50 joint venture for the distribution of Saab cars in China.
Spyker has been struggling to find cash for Saab, which was forced to stop production at its plant in Sweden in April. Last week an agreement to start manufacturing cars in China with automaker Hawtai collapsed after the Chinese company said it would not manage to obtain the necessary approvals from authorities in time to save Saab from collapse.
Spyker said the Pang Da deal is also subject to conditions, including clearance by Chinese government agencies, the European Investment Bank, previous Saab owner General Motors Corp. and the Swedish National Debt Office.
However, Spyker CEO Victor Muller said it would be easier to obtain the regulatory approvals now because Pang Da is not a car manufacturer.
He said talks with the distributor had begun at the end of last week.
"It was a very busy weekend, you can say. We didn't sleep much, but that has been the case for six weeks," he said during a conference call.
He said Spyker had initially focused on finding a manufacturing partner — the "big attraction for going into China" — but realized regulatory approvals would take too long for Saab.
He said Pang Da appeared as a particularly attractive partner now because it might help Saab catch up on sales lost during the production standstill.
The deal with Pang Da means the Chinese company will immediately pay euro30 million to buy around 1,300 Saab vehicles that will go on sale in China in the third quarter. It is also expected to pay another euro15 million for more cars within 30 days.
Muller said the agreement provides for the creation of a manufacturing joint venture, where Saab would own 50 percent and the remaining shares would be split between a potential production partner and Pang Da.
However, Muller said it would take around two years before Saab could start producing cars in China.
"We have decided to postpone the discussion about the manufacturing by a few months and ensure that we make a proper analysis of the best possible partners for the manufacturing in China together with Pang Da," he said.
Spyker said the money from Pang Da would secure its medium term funding and allow it to reach agreements on payments and delivery with suppliers needed to restart production.
"This partnership allows us not only to distribute Saab — the iconic European premium brand — in China, but also to set up a manufacturing joint venture which will further enhance the competitive position of the Saab brand in China," Pang Da CEO Pang Qinghua said in a statement.
Pang Da, based in Tangshan, in northern China's Hebei province, distributes dozens of car brands in 23 Chinese provinces and cities, including Audi, Volkswagen, Mazda, Honda, Subaru and Chery.
In 2010, it reported a net profit increase of 22 percent to 1.24 billion yuan ($190.8 million) after selling 470,000 vehicles.
AP writer Elaine Kurtenbach contributed to this report from Shanghai.